The UK tax system is undergoing a major digital transformation. From April 2026, the HM Revenue & Customs (HMRC) will introduce Making Tax Digital for Income Tax Self Assessment (MTD for ITSA).
This initiative will significantly change how sole traders and landlords report their income and manage their tax obligations.
Instead of submitting a single annual Self Assessment tax return, individuals will need to maintain digital financial records and submit updates to HMRC throughout the year.
If you are self-employed or earn income from property, understanding Making Tax Digital 2026 is essential to stay compliant and avoid penalties.
In this blog, we explain what Making Tax Digital is, who it applies to, key deadlines, and how NS Accounting can help you prepare.
Quick Links: What This Making Tax Digital 2026 Guide Covers
- What Is Making Tax Digital (MTD)?
- Who Does Making Tax Digital Apply To?
- Making Tax Digital Start Dates
- What Will Change Under Making Tax Digital 2026?
- Making Tax Digital 2026 Quarterly Deadlines
- Making Tax Digital 2026 Penalties
- Who May Be Exempt From Making Tax Digital 2026?
- How to Prepare for Making Tax Digital 2026
- Why Choose NS Accounting for Making Tax Digital 2026?
- Get MTD Ready With NS Accounting
What Is Making Tax Digital (MTD)?
Making Tax Digital (MTD) is a UK government initiative introduced by HM Revenue & Customs to modernise the tax system.
The goal is to make tax reporting:
- More accurate
- More efficient
- Fully digital
Under Making Tax Digital, taxpayers must:
- Keep digital records of income and expenses
- Use MTD compatible accounting software
- Send quarterly updates directly to HMRC
This system replaces the traditional approach where taxpayers submit one annual Self Assessment return.
For the official rules, timelines and sign-up process, see HMRC’s Making Tax Digital for Income Tax step-by-step guidance.
Who Does Making Tax Digital Apply To?
Making Tax Digital for Income Tax mainly applies to:
- Sole traders
- Self-employed individuals
- Landlords earning rental income
Currently, limited companies and general partnerships are not included, although they may be added in the future as the programme expands.
Your MTD start date depends on your total qualifying income, which includes income from both:
- Self-employment
- Property rentals
Making Tax Digital Start Dates
| Income Level | MTD Start Date |
|---|---|
| Over £50,000 | April 2026 |
| £30,000 – £50,000 | April 2027 |
| £20,000 – £30,000 | April 2028 |
If your combined income from self-employment and property exceeds £50,000, you must comply with Making Tax Digital from April 2026.
Preparing early helps ensure a smooth transition to digital tax reporting.
What Will Change Under Making Tax Digital 2026?
The new system requires taxpayers to complete three key digital tasks each year.
1. Keep Digital Records
Businesses must maintain digital records of all income and expenses.
These records must include:
- Transaction date
- Amount received or spent
- Category of income or expense
Records must be stored using MTD compatible accounting software or digitally linked spreadsheets.
Manual bookkeeping alone will no longer meet HMRC requirements.
2. Submit Quarterly Updates
Under MTD, taxpayers must submit four quarterly updates to HMRC each year.
These updates summarise:
- Total income
- Total business expenses
- Overall financial activity for that quarter
Quarterly reporting provides greater transparency and helps reduce errors in tax calculations.
3. End of Period Statement (EOPS) and Final Declaration
At the end of the tax year, two additional submissions are required.
End of Period Statement (EOPS)
The End of Period Statement confirms the final income and expenses for your business after any adjustments.
Final Declaration
The Final Declaration replaces the traditional Self Assessment tax return and confirms all income sources for the tax year.
The deadline for this submission remains 31 January following the end of the tax year.
Making Tax Digital 2026 Quarterly Deadlines
Quarterly submissions follow fixed deadlines under the MTD system.
| Quarter | Period | Deadline |
|---|---|---|
| Quarter 1 | 6 April – 5 July | 7 August |
| Quarter 2 | 6 July – 5 October | 7 November |
| Quarter 3 | 6 October – 5 January | 7 February |
| Quarter 4 | 6 January – 5 April | 7 May |
Meeting these deadlines is essential to avoid penalties from HMRC.
Making Tax Digital 2026 Penalties
Under the new MTD penalty system, missed submissions earn penalty points.
Once a threshold is reached, HMRC can issue a £200 fine.
Repeated missed deadlines may result in additional penalties and compliance issues.
Working with a professional accountant ensures your quarterly submissions are filed correctly and on time.
Worried about missing a deadline or facing an HMRC penalty? Our MTD Income Tax accountants handle your quarterly submissions for you. Book a free consultation and get MTD-ready with confidence.
Who May Be Exempt From Making Tax Digital 2026?
Some individuals may qualify for exemptions from MTD.
These may include individuals who are digitally excluded due to:
- Age
- Disability
- Living in remote areas with limited internet access
Certain roles such as trustees or personal representatives may also qualify for exemption.
However, most sole traders and landlords will need to comply with the new rules.
How to Prepare for Making Tax Digital 2026
Preparing early will help ensure your business is ready when Making Tax Digital 2026 begins.
Use MTD Compatible Software
You must use approved accounting software that connects directly with HMRC systems.
This software helps you:
- Record financial transactions digitally
- Track income and expenses
- Submit quarterly updates
Maintain Accurate Digital Records
Keeping accurate digital records of all transactions helps ensure compliance and reduces errors in tax reporting.
Use Bridging Software for Spreadsheets
If you currently use spreadsheets for bookkeeping, they can still be used with MTD bridging software that connects your records to HMRC.
Work With an Accountant
An experienced accountant ensures:
- Your accounting software is correctly configured
- Quarterly submissions are completed on time
- Your business remains compliant with HMRC rules
Why Choose NS Accounting for Making Tax Digital 2026?
Transitioning to Making Tax Digital for Income Tax can be challenging for businesses that are used to traditional bookkeeping methods.
At NS Accounting, our specialist MTD Income Tax accountants help sole traders and landlords across the UK become fully MTD ready.
Our services include:
- Setting up MTD compatible accounting software
- Managing quarterly submissions to HMRC
- Maintaining digital bookkeeping records
- Completing End of Period Statements
- Filing Final Declarations
- Providing expert tax advice and compliance support
Our experienced accountants ensure your business remains fully compliant with HMRC requirements.
Avoid Penalties and Stay Compliant
Failing to prepare for Making Tax Digital 2026 could lead to:
- Missed filing deadlines
- HMRC penalty points
- Financial penalties
Preparing early ensures your business can adapt smoothly to the new digital tax system.
Get MTD Ready With NS Accounting
Making Tax Digital represents one of the biggest changes to the UK tax system for self-employed individuals and landlords.
If your income means you must comply from April 2026, now is the best time to prepare.
NS Accounting can help you:
- Set up MTD compliant accounting software
- Maintain digital bookkeeping records
- Submit quarterly updates to HMRC
- Complete year-end tax declarations
Our expert accountants will ensure your business is fully prepared for Making Tax Digital 2026.
Contact NS Accounting today and get your business MTD ready.
